Total proposed spending for next year is $2.1 billion higher than current fiscal year’s budget

MIDLAND — Michael D. LaFaive, the Mackinac Center’s director of fiscal policy, today characterized Gov. Granholm’s proposal to impose a $554 million tax hike as “one last sop to Lansing politicians, their lieutenants and government employee unions.” The governor argues that her proposed tax system will become revenue-neutral after 2013, but LaFaive observed, “Revenue-neutral or not, lawmakers should not be restructuring the state’s tax system before adopting significant spending reforms — reforms more fundamental than the half-hearted measures the governor has proposed so far.

“The governor is calling in tax architects while Michigan’s house burns down,” LaFaive added. “Michigan’s per-capita personal income is already 13.1 percent below the national average. The governor’s tax hike proposal is madness, and it will only make us poorer still.” LaFaive also noted that Michigan Senate Fiscal Agency figures show that under the governor’s plan, the adjusted gross total appropriation for fiscal 2011 would be $2.1 billion higher than for fiscal 2010.

LaFaive and Mackinac Center Adjunct Scholar James Porterfield recently estimated that the state could achieve at least $557 million in first-year savings by enrolling state and public school employees in insurance plans based on health savings accounts. The projected total savings from this shift would grow to almost $32 billion through 2021.

LaFaive added: “Michigan lawmakers hit Michigan with a 2007 tax hike worth $1.4 billion, and already they want more? This has less to do with helping the people of Michigan and more to do with sparing lawmakers the really tough decisions that many Michigan households have already had to make.”